Subscribe To Our Free Newsletter |
Sebi’s proposal on TER to curb mis-selling, bring in transparency
Sebi's proposed sweeping changes to mutual funds' Total Expense Ratio (TER) will curb distributor practices of unnecessary switching of schemes and pushing new fund offerings for higher commissions, experts said on Friday.
TER accounts for the fees and expenses charged by asset management companies (AMCs).
The Securities and Exchange Board of India (Sebi), in its consultation paper on Thursday, proposed the introduction of performance fees for funds.
It proposed two approaches in this regard but also suggested testing the models under the Regulatory Sandbox.
Considering the underperformance of most mutual fund schemes, the proposal to introduce performance-linked expense ratios along the lines of Portfolio Management Services (PMS) is a step in the right direction, Gopal Kavalireddi, Head of Research at FYERS, said.
Globally, many markets have performance fee structures, but the prevalence of these is limited. Many times, performance fee structures tend to be too complex for inves